DYNE THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, or this Quarterly Report, and our audited condensed consolidated financial statements and related notes for the year endedDecember 31, 2021 , including in our Annual Report on Form 10-K filed with theSecurities and Exchange Commission , orSEC , onMarch 10, 2022 . Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, included information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage muscle disease company dedicated to advancing innovative life-transforming therapeutics for people living with genetically driven diseases. We are utilizing our proprietary FORCE platform to overcome the current limitations of muscle tissue delivery and advance modern oligonucleotide therapeutics for muscle diseases. Our proprietary FORCE platform therapeutics consist of an oligonucleotide payload that we rationally design to target the genetic basis of the disease we are seeking to treat, a clinically validated linker and an antigen-binding fragment, or Fab, that we attach to the payload using the linker. With our FORCE platform, we have the flexibility to deploy different types of oligonucleotide payloads with specific mechanisms of action that modify target functions. We leverage this modularity to focus on muscle diseases with high unmet need, with etiologic targets and with clear translational potential from preclinical disease models to well-defined clinical development and regulatory pathways. Using our FORCE platform, we are assembling a broad portfolio of muscle disease therapeutics, including our programs in myotonic dystrophy type 1, or DM1, Duchenne muscular dystrophy, or DMD, and facioscapulohumeral dystrophy, or FSHD. In addition, we plan to expand our portfolio through development efforts focused on rare skeletal muscle diseases, as well as cardiac and metabolic muscle diseases, including some with larger patient populations. We have identified product candidates for each of our DM1, DMD and FSHD programs that are in varying stages of preclinical and clinical development. For our product candidate DYNE-101 for DM1, inSeptember 2022 , we announced that we initiated the ACHIEVE trial, a Phase 1/2 global clinical trial. The ACHIEVE trial consists of a 24-week multiple ascending dose, or MAD, randomized, placebo-controlled period, a 24-week open-label extension and a 96-week long-term extension. The trial, which is designed to be registrational, is expected to enroll approximately 64 adult patients with DM1 who are 18 to 49 years of age. The primary endpoints are safety and tolerability; secondary endpoints include pharmacokinetics and pharmacodynamics, including change from baseline in splicing, as well as measures of muscle strength and function. In the MAD portion of the ACHIEVE trial, patients will be randomized to receive DYNE-101 or placebo intravenously every four weeks or every eight weeks for 24 weeks, depending on cohort. Patient cohorts will be dosed from 1.8 mg/kg to 10.2 mg/kg (approximate ASO dose) across four cohorts. Following the placebo-controlled period, patients transition to DYNE-101 treatment in the open-label portion of the trial and in the long-term extension. Data on safety, tolerability and splicing from the MAD portion of the trial are anticipated in the second half of 2023. For our product candidate DYNE-251 for patients with DMD amenable to skipping exon 51, inSeptember 2022 , we announced that we initiated dosing in the DELIVER trial, a Phase 1/2 global clinical trial. The DELIVER trial consists of a 24-week MAD randomized, placebo-controlled period, a 24-week open-label extension and a 96-week long-term extension. The trial, which is designed to be registrational, is expected to enroll approximately 46 ambulant and non-ambulant males with DMD who are ages 4 to 16 and have mutations amenable to exon 51 skipping therapy. The primary endpoints are safety, tolerability and change from baseline in dystrophin levels as measured by Western blot. Secondary endpoints include measures of muscle function, exon skipping and pharmacokinetics. InOctober 2022 , theU.S. Food and Drug Administration granted Fast Track designation for DYNE-251. In the MAD portion of the DELIVER trial, patients will be randomized to receive DYNE-251 or placebo every four weeks intravenously for 24 weeks based on a global protocol designed to incorporate feedback from multiple regulatory authorities, including on starting dose. Patient cohorts will be dosed from 0.7 mg/kg to 40 mg/kg (approximate PMO dose) inthe United States . Outsidethe United States , patient cohorts will be dosed from 5 mg/kg to 40 mg/kg. Following the placebo-controlled period, patients transition to DYNE-251 treatment in the open-label portion of the trial and in the long-term extension. Data on safety, tolerability and dystrophin from the MAD portion of the trial are anticipated in the second half of 2023. 16 -------------------------------------------------------------------------------- InSeptember 2022 , we announced that we are prioritizing our focus and resources on our clinical programs, DYNE-101 in DM1 and DYNE-251 in DMD. As a result, we announced the deferral of the Investigational New Drug, or IND, application submission for our product candidate DYNE-301 for FSHD that we had originally targeted for the second half of 2022. We plan to provide an update on our FSHD program in 2023. We were incorporated and commenced operations in 2017. Since our incorporation, we have devoted substantially all of our financial resources and efforts to organizing and staffing our company, business planning, raising capital, conducting research and development activities and filing and prosecuting patent applications. We do not have any products for sale and have not generated any revenue from product sales or otherwise. To date, we have principally raised capital through sales of equity securities. OnSeptember 21, 2020 , we completed our initial public offering, or IPO, pursuant to which we issued and sold 14,089,314 shares of our common stock, including 1,837,736 shares pursuant to the full exercise of the underwriters' option to purchase additional shares. We received net proceeds of$246.4 million , after deducting underwriting discounts and commissions and offering expenses payable by us. OnJanuary 25, 2021 , we completed a follow-on public offering, pursuant to which we issued and sold 6,000,000 shares of our common stock. We received net proceeds of$157.2 million , after deducting underwriting discounts and commissions and offering expenses. Since our inception, we have incurred significant operating losses. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more product candidates. For the three and nine months endedSeptember 30, 2022 , we reported net losses of$41.4 million and$129.3 million , respectively. As ofSeptember 30, 2022 , we had an accumulated deficit of$357.7 million .
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We expect that our expenses and capital expenditure requirements will increase substantially in connection with our ongoing activities, particularly if and as we:
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advance our product candidates for DM1, DMD and FSHD and conduct research programs in additional indications;
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expand the capabilities of our proprietary FORCE platform;
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seek marketing approvals for any product candidates that successfully complete clinical trials;
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obtain, expand, maintain, defend and enforce our intellectual property portfolio;
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hire additional clinical, regulatory and scientific personnel;
•
establish manufacturing sources for any product candidate we may develop, including the Fab antibody, Val-cit linker and therapeutic payload that will comprise the product candidate, and secure supply chain capacity to provide sufficient quantities for preclinical and clinical development and commercial supply;
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ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and
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add operational, legal, compliance, financial and management information systems and personnel to support our research, product development and future commercialization efforts, as well as to support our operations as a public company.
We will not generate revenue from product sales unless and until we successfully
complete clinical development and obtain regulatory approval for any product
candidates we may develop. If we obtain regulatory approval for or otherwise
commercialize any product candidates we may develop, we expect to incur
significant expenses related to developing our commercialization capabilities to
support product sales, marketing and distribution. Further, we expect to
continue to incur additional costs associated with operating as a public
company.
As a result, we will need substantial additional funding to support our
continuing operations and pursue our growth strategy. Until such time as we can
generate significant revenue from product sales, if ever, we expect to finance
our operations through a combination of equity offerings, debt financings,
collaborations, strategic alliances and licensing arrangements. We may be unable
to raise additional funds or enter into such other agreements or arrangements
when needed, on favorable terms, or at all. If we fail to raise capital or enter
into such agreements or arrangements as and when needed, we may have to
significantly delay, reduce or eliminate the development or future
commercialization of one or more product candidates we may develop.
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Because of the numerous risks and uncertainties associated with product
development, we are unable to accurately predict the timing or amount of
increased expenses or when, or if, we will be able to achieve profitability.
Even if we do achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis. If we fail to become profitable or
are unable to sustain profitability on a continuing basis, then we may be unable
to raise capital, maintain our research and development efforts, expand our
business or continue our operations at planned levels, and as a result we may be
forced to substantially reduce or terminate our operations.
We believe that our existing cash, cash equivalents and marketable securities
will enable us to fund our operating expenses and capital expenditure
requirements through 2024. We have based our estimates as to how long we expect
we will be able to fund our operations on assumptions that may prove to be
wrong. We could use our available capital resources sooner than we currently
expect, in which case we would be required to obtain additional financing, which
may not be available to us on acceptable terms, or at all. Our failure to raise
capital as and when needed would have a negative impact on our financial
condition and our ability to pursue our business strategy. See "-Liquidity and
capital resources" below.
Impact of COVID-19 on our business
The worldwide COVID-19 pandemic may affect our ability to initiate and complete preclinical studies, delay the progress of our ongoing clinical trials or the initiation of future clinical trials, disrupt regulatory activities or have other adverse effects on our business, results of operations, financial condition and prospects. In addition, the pandemic has caused substantial disruption to supply chains and may adversely impact economies worldwide, both of which could adversely affect our business and operations. To date, we have not experienced material business disruptions, including with our vendors, or impairments of any of our assets as a result of the pandemic. We continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees and other business partners regarding workplace policies, practices and procedures. We are continuing to monitor the potential impact of the pandemic, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects.
Components of our results of operations
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all. If our development efforts are successful and we commercialize products, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from product sales, as well as upfront, milestone and royalty payments from such collaboration or license agreements, or a combination thereof.
Research and development expenses
Research and development expenses consist primarily of costs incurred for our research activities and development of our programs. These expenses include:
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development and operation of our proprietary FORCE platform;
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employee-related expenses, including salaries, related benefits and stock-based compensation expense, for employees engaged in research and development functions;
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expenses incurred in connection with our research programs and development of our product candidates, including those incurred under agreements with third parties, such as consultants and contract research organizations, or CROs to conduct preclinical studies and clinical trials;
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the cost of laboratory supplies and acquiring, developing and manufacturing materials for use in our research, preclinical studies and clinical trials, including those incurred under agreements with third parties, such as consultants and contract manufacturing organizations, or CMOs;
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facilities, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance; and
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costs related to compliance with regulatory requirements.
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We expense research and development costs as incurred. Advance payments that we
make for goods or services to be received in the future for use in research and
development activities are recorded as prepaid expenses. The prepaid amounts are
expensed as the related goods are delivered or the services are performed.
Our direct external research and development expenses consist of costs that
include fees, reimbursed materials and other costs paid to consultants,
contractors, CMOs and CROs in connection with our development, manufacturing and
clinical activities. We have not allocated our direct external research and
development costs to specific programs or product candidates that are not in
clinical development.
Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
Accordingly, we expect that our research and development expenses will increase
substantially as we advance DYNE-101 and DYNE-251 through clinical trials and in
connection with our preclinical and clinical development activities if and as we
advance any other product candidates through preclinical studies and clinical
trials. At this time, we cannot accurately estimate or know the nature, timing
and costs of the efforts that will be necessary to complete the preclinical and
clinical development of any product candidates we may develop. The successful
development of any product candidate is highly uncertain. This is due to the
numerous risks and uncertainties associated with product development, including
the following:
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the timing and progress of preclinical and clinical development activities;
•
the number and scope of programs we decide to pursue and their regulatory paths to market;
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the need to raise funding to complete preclinical and clinical development of any product candidates we may develop;
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our ability to establish new licensing or collaboration arrangements and the progress of the development efforts of third parties with whom we may enter into such arrangements;
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our ability to maintain our current research and development programs and to establish new programs;
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the successful initiation, enrollment and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;
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the receipt and related terms of regulatory approvals from applicable regulatory authorities for any product candidates we may develop;
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the availability of specialty raw materials for use in production of any product candidate we may develop;
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establishing agreements with third-party manufacturers for supply of product candidate components for our clinical trials;
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our ability to obtain and maintain patents, trade secret protection and
regulatory exclusivity, both in
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our ability to protect our other rights in our intellectual property portfolio;
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commercializing product candidates, if and when approved, whether alone or in collaboration with others; and
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obtaining and maintaining third-party insurance coverage and adequate reimbursement for any approved products.
A change in the outcome of any of these variables with respect to the development of any product candidate we may develop could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any product candidate we may develop.
General and administrative expenses
General and administrative expenses consist primarily of employee-related
expenses, including salaries, related benefits and stock-based compensation, for
employees in executive, finance, corporate and business development and
administrative functions. General and administrative expenses also include legal
fees relating to patent and corporate matters; professional fees for accounting,
auditing, tax and administrative consulting services; insurance costs;
administrative travel expenses; and facility-related expenses, which include
direct depreciation costs and allocated expenses for rent and maintenance of
facilities and other operating costs.
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We anticipate that our general and administrative expenses will increase in the
future as we increase our headcount to support our growth strategy. We also
anticipate that we will incur increased accounting, audit, legal, regulatory,
compliance and director and officer insurance costs as well as investor and
public relations expenses associated with our operations as a public company. In
addition, if we obtain regulatory approval for a product candidate and do not
enter into a third-party commercialization collaboration, we expect to incur
significant expenses related to building a sales and marketing team to support
product sales, marketing and distribution activities.
Interest income
Interest income consists of interest earned on our cash, cash equivalents and marketable securities. We expect our interest income to increase during 2022 due to an overall increase in interest rates in the broader capital market, which we expect will be partially offset by the impact of having a lower cash, cash equivalents and marketable securities balance on which we are earning interest.
Other income (expense), net
Other expense consists of realized losses on sales of marketable securities.
Income taxes
Since our inception, we have not recorded any
Results of operations
Comparison of the three months ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended September 30,
(in thousands) 2022 2021 Change
Operating expenses:
Research and development $ 34,670 $ 36,510 $ (1,840 )
General and administrative 7,609 6,256 1,353
Total operating expenses 42,279 42,766 (487 )
Loss from operations (42,279 ) (42,766 ) 487
Other income (expense):
Interest income 903 184 719
Other income (expense), net (9 ) - (9 )
Total other income (expense), net 894 184 710
Net loss $ (41,385 ) $ (42,582 ) $ 1,197 Research and development expenses
The following table summarizes our research and development expenses for the
three months ended
Three Months Ended September 30,
(in thousands) 2022 2021 Change Direct research and development expenses by product candidate: DYNE-101 (DM1) $ 9,148 $ 7,195$ 1,953 DYNE-251 (DMD) 9,561 18,636 (9,075 ) Unallocated research and development expenses: Platform and external research and development 2,952 3,107 (155 ) Personnel related (including stock-based compensation) 8,921 5,684 3,237 Facility related and other 4,088 1,888 2,200
Total research and development expenses
The increase in expenses related to DYNE-101 was primarily due to increased
clinical trial activity associated with the preparation for the initiation of
the ACHIEVE trial, which initiated in the third quarter of 2022. The decrease in
expenses
20
--------------------------------------------------------------------------------related to DYNE-251 was primarily due to the timing of variable manufacturing costs incurred in the third quarter of 2021, including the purchase of raw materials to produce a sufficient clinical supply of drug product for the DELIVER trial, which initiated dosing in the third quarter of 2022.
The decrease in platform and external research and development expenses was primarily due to the prioritization of our focus and resources on our clinical programs, which resulted in lower platform related costs associated with less preclinical and research activity. The increase in personnel-related expenses was primarily due to increased headcount in our research and development function. The increase in facility-related and other expenses was primarily due to the increased costs of supporting a larger number of research and development personnel, their research efforts and increased rent expense related to our facility lease that commenced inSeptember 2021 .
General and administrative expenses
The following table summarizes our general and administrative expenses for the
three months ended
Three Months Ended September 30,
(in thousands) 2022 2021 Change
Personnel-related $ 2,432 $ 1,779 $ 653
Stock-based compensation expense 1,730 2,216 (486 )
Professional and consulting fees 2,475 1,518 957
Facility-related and other 972 743 229
Total general and administrative expenses $ 7,609 $
6,256
The increase in personnel-related expenses was primarily the result of an increase in headcount in our general and administrative function. The decrease in stock-based compensation expense was due to the continued vesting of historical grants and lower grant date fair values on awards granted in 2022. The increase in professional and consulting fees was primarily due to higher intellectual property related legal costs associated with our patent portfolio. The increase in facility-related and other expenses was primarily due to the increased costs of supporting a larger number of general and administrative personnel and increased rent expense related to our facility lease that commenced inSeptember 2021 .
Interest income
Interest income for the three months endedSeptember 30, 2022 and 2021 was$0.9 million and$0.2 million , respectively, due to interest earned on invested cash balances. Other (expense) income, net Other income for the three months endedSeptember 30, 2022 was less than$0.1 million due to realized losses on the sale of marketable securities. We did not incur any realized gains or losses on the sale of marketable securities in the three months endedSeptember 30, 2021 .
Comparison of the nine months ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Ended September 30,
(in thousands) 2022 2021 Change
Operating expenses:
Research and development $ 109,570 $ 79,007 $ 30,563
General and administrative 21,247 19,058 2,189
Total operating expenses 130,817 98,065 32,752
Loss from operations (130,817 ) (98,065 ) (32,752 )
Other income (expense):
Interest income 1,575 560 1,015
Other income (expense), net (30 ) - (30 )
Total other income (expense), net 1,545 560 985
Net loss $ (129,272 ) $ (97,505 ) $ (31,767 )
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Research and development expenses
The following table summarizes our research and development expenses for the
nine months ended
Nine Months Ended September 30,
(in thousands) 2022 2021 Change Direct research and development expenses by product candidate: DYNE-101 (DM1) $ 23,466$ 16,959 $ 6,507 DYNE-251 (DMD) 40,991 32,346 8,645 Unallocated research and development expenses: Platform and external research and development 8,323 8,492 (169 ) Personnel related (including stock-based compensation) 24,685 15,892 8,793 Facility related and other 12,105 5,318 6,787
Total research and development expenses
The increase in expenses related to DYNE-101 was due to increased clinical trial activity in the nine months endedSeptember 30, 2022 associated with the preparation for the initiation of the ACHIEVE trial, which initiated in the third quarter of 2022, and higher variable manufacturing costs in the nine months endedSeptember 30, 2022 to produce a sufficient clinical supply of drug product for the ACHIEVE trial. The increase in expenses related to DYNE-251 was due to higher clinical trial related costs in the nine months endedSeptember 30, 2022 for the DELIVER trial, which initiated dosing in the third quarter of 2022, and higher variable manufacturing costs in the nine months endedSeptember 30, 2022 to produce a sufficient clinical supply of drug product for the DELIVER trial. The decrease in platform and external research and development expenses was primarily due to the prioritization of our focus and resources on our clinical programs, which resulted in lower platform related costs associated with less preclinical and research activity. The increase in personnel-related expenses was primarily due to increased headcount in our research and development function. The increase in facility-related and other expenses was primarily due to the increased costs of supporting a larger number of research and development personnel, their research efforts and increased rent expense related to our facility lease that commenced inSeptember 2021 .
General and administrative expenses
The following table summarizes our general and administrative expenses for the
nine months ended
Nine Months Ended September 30,
(in thousands) 2022 2021 Change
Personnel-related $ 7,076 $ 4,737 $ 2,339
Stock-based compensation expense 5,259 6,388 (1,129 )
Professional and consulting fees 5,893 5,319 574
Facility-related and other 3,019 2,614 405
Total general and administrative expenses
19,058
The increase in personnel-related expenses was primarily the result of an increase in headcount in our general and administrative function. The decrease in stock-based compensation expense was primarily the result of the modification inJune 2022 of equity awards granted to our chief executive officer that resulted in a decrease in stock-based compensation expense. The increase in professional and consulting fees was primarily due to higher intellectual property related legal costs associated with our patent portfolio. The increase in facility-related and other expenses was primarily due to the increased costs of supporting a larger number of general and administrative personnel and increased rent expense related to our facility lease that commenced inSeptember 2021 . Interest income Interest income for the nine months endedSeptember 30, 2022 and 2021 was$1.6 million and$0.6 million , respectively, due to interest earned on invested cash balances. Other (expense) income, net 22
-------------------------------------------------------------------------------- Other expense for the nine months endedSeptember 30, 2022 was less than$0.1 million due to realized net losses on the sale of marketable securities. We did not incur any realized gains or losses on the sale of marketable securities in the nine months endedSeptember 30, 2021 .
Liquidity and capital resources
Sources of liquidity
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we support our continued research activities and development of our programs and platform. We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates for several years, if at all. To date, we have funded our operations primarily with proceeds from sales of equity securities, borrowings under our loan agreement and, most recently, with proceeds from the sale of common stock in our IPO and theJanuary 2021 offering. As ofSeptember 30, 2022 we had cash, cash equivalents and marketable securities of$248.1 million . InNovember 2021 , we filed a universal shelf registration statement on Form S-3 to register for sale from time to time up to$400.0 million of common stock, preferred stock, debt securities, warrants and/or units in one or more offerings. Further, inNovember 2021 , we entered into an Open Market Sale AgreementSM withJefferies LLC , or Jefferies, pursuant to which, from time to time, we may offer and sell shares of our common stock having an aggregate offering price of up to$150.0 million . Sales of common stock through Jefferies may be made by any method that is deemed an "at-the-market" offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. To date, we have not made any sales under our at-the-market offering program.
Cash flows
The following table summarizes our sources and uses of cash for each of the
periods presented:
Nine Months Ended September 30,
(in thousands) 2022 2021
Net cash used in operating activities $ (124,453 ) $ (91,495 )
Net cash provided by (used in) investing activities 67,965 (137,657 )
Net cash provided by financing activities 187 157,732
Net increase (decrease) in cash, cash equivalents and
restricted cash $ (56,301 ) $ (71,420 )
Operating activities
During the nine months ended September 30, 2022 , operating activities used
$124.5 million of cash, due to our net loss of $129.3 million and net cash used
by changes in our operating assets and liabilities of $10.5 million , partially
offset by non-cash charges of $15.3 million . Net cash used by changes in our
operating assets and liabilities consisted of a $4.7 million increase in prepaid
expenses and other current assets and a $5.9 million decrease in accounts
payable and other liabilities. During the nine months ended September 30, 2021 ,
operating activities used $91.5 million of cash, due to our net loss of $97.5
million and net cash used by changes in our operating assets and liabilities of
$8.1 million , partially offset by non-cash charges of $14.1 million . Net cash
used by changes in our operating assets and liabilities primarily consisted of a
$12.8 million increase in prepaid expenses and other current assets and a $2.9
million increase in prepayments made for lessor-owned lease assets, partially
offset by a $7.7 million increase in accounts payable and other liabilities.
Changes in our operating assets and liabilities during these periods were
generally due to growth in our business, increased manufacturing activities, the
advancement of our research programs and product candidates, clinical trial
activity and the timing of vendor invoices and payments.
Investing activities
During the nine months endedSeptember 30, 2022 , net cash provided by investing activities was$68.0 million due to maturities of marketable securities of$162.4 million and sales of marketable securities of$2.8 million , partially offset by purchases of marketable securities of$94.7 million and purchases of property and equipment of$2.5 million . During the nine months endedSeptember 30, 2021 , net cash used in investing activities was$137.7 million due to purchases of marketable securities of$208.2 million and purchases of property and equipment of$1.6 million , partially offset by maturities of marketable securities of$72.2 million . 23 --------------------------------------------------------------------------------
Financing activities
During the nine months endedSeptember 30, 2022 , net cash provided by financing activities was$0.2 million , consisting of proceeds received from exercises of employee stock options.
During the nine months ended
Funding requirements
We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the clinical development of DYNE-101 and DYNE-251, the development of DYNE-301 and additional research programs. The timing and amount of our operating expenditures will depend largely on:
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the identification of additional research programs and product candidates;
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the scope, progress, costs and results of preclinical and clinical development of any product candidates we may develop;
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the costs, timing and outcome of regulatory review of any product candidates we may develop;
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our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;
•
changes in laws or regulations applicable to any product candidates we may develop, including but not limited to clinical trial requirements for approvals;
•
the cost and timing of obtaining materials to produce adequate product supply for any preclinical or clinical development of any product candidate we may develop;
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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any product candidate we may develop for which we obtain marketing approval;
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the legal costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims;
•
additions or departures of key scientific or management personnel;
•
our ability to establish and maintain collaborations on favorable terms, if at all, as well as the costs and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; and
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the costs of operating as a public company.
We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements through 2024. We expect that our liquidity will be sufficient to achieve proof-of-concept data readouts for DYNE-101 and DYNE-251. We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of holders of our common stock. Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed, on favorable terms, or at all. If we fail to raise capital or enter into such agreements other arrangements as and when needed, we may have to significantly delay, reduce or eliminate the development or future commercialization of one or more of our product candidates we may develop. See Item 1A. "Risk factors" in this Quarterly Report for additional risks associated with our substantial capital requirements.
Contractual and other obligations
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We enter into contracts in the normal course of business with CROs, CMOs and
other third parties for preclinical research studies, clinical trials and
testing and manufacturing services. These contracts typically do not contain
minimum purchase commitments and are generally cancelable by us upon written
notice. Payments due upon cancellation consist of payments for services provided
or expenses incurred, including noncancelable obligations of our service
providers, up to the date of cancellation and in the case of certain
arrangements with CROs and CMOs may include non-cancelable fees.
On December 4, 2020 , we entered into a lease agreement for office and laboratory
space, which we amended in January 2021 , March 2021 and June 2021 . The lease has
a term of 8.5 years that commenced when we gained access to the office and
laboratory space in September 2021 . Our obligation for the payment of the base
rent began in April 2022 and is $0.4 million per month, increasing to $0.5
million per month during the term of the lease. We have two options to extend
the term of the lease, each for a period of an additional five years.
Critical Accounting Policies and Significant Judgments and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles inthe United States . The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. We define our critical accounting policies as those accounting principles generally accepted inthe United States of America that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. Management has determined that our most critical accounting policies are those relating to accrued research and development expenses and stock-based compensation. As we advance our product candidates into and through clinical development, we expect research and development expenses and, in particular, our accounting for accrued research and development expenses to be an increasingly important critical accounting policy. There have been no significant changes to our critical accounting policies or estimates from those described in our Annual Report on Form 10-K filed with theSEC onMarch 10, 2022 .
Recently Issued and Adopted Accounting Pronouncements
There were no recently issued accounting pronouncements that are expected to
materially impact our financial statements as of
Emerging growth company and smaller reporting company status
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an "emerging growth company." Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions untilDecember 31, 2025 or until such earlier time that we are no longer an "emerging growth company." We are also a "smaller reporting company" as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than$250 million or (ii) our annual revenue is less than$100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than$700 million as of the last business day of our most recently completed second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. 25
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